Four out of five businesses not prepared for Brexit, new research shows
Four out of five businesses don’t know the full extent of Brexit risks and don’t have sufficient preparations in place, new research has shown.
A poll by EY, which canvassed the views of over 1,700 businesses, found that with only days to go before the UK leaves the EU, there is an alarming number of businesses expecting ‘business as usual’ after the transition period ends, despite the inevitability of significant disruption and upheaval.
The poll revealed that 40 per cent of businesses believe that once the necessary operational changes have been made they will continue with business as usual, while 20 per cent acknowledge that it will present a bump in the road and once the initial challenges have been navigated, normal service will resume.
Moreover, one in 10 businesses expect to see no disruption whatsoever.
Sally Jones, EY’s trade strategy and Brexit leader, commented, “There have been comparisons made between Brexit and Y2K – the computer programming shortcut that was expected to cause extensive havoc as the year changed from 1999 to 2000 – but Brexit is a fundamentally different challenge for business.
“Y2K presented a specific problem with a defined date that failed to materialise thanks to hard work from dedicated IT teams. Brexit is a process that will likely challenge businesses for weeks if not months following the end of the transition period on 31 December. It is also a problem that cuts across all of a business’ functions, not just IT, and the sheer level of uncertainty means that companies still don’t have anything like enough specificity to prepare.
"Businesses that believe Brexit will be a ‘storm in a teacup’, quickly followed by business as usual, may live to regret not preparing for the fundamental challenges it will bring to how they operate and trade.”
EY warned that with or without a UK-EU trade deal, the end of the Brexit transition period will instigate the biggest simultaneous change to the UK’s trading, regulatory, immigration, and judicial system in decades. With no precedent for such wide-ranging implications and critical outstanding questions on how new processes will work, predictable and unpredictable disruptions to business continuity are guaranteed.
The immediate effects of leaving the single market and customs union will be experienced by businesses (particularly those who move goods across UK borders) and employers. While many large companies have prepared as much as possible, reports consistently suggest a lack of readiness amongst small businesses — a key element of supply chains.
Sally Jones, concludes: “There is simply no way that businesses can be fully prepared for what’s coming as they don’t know what they are preparing for. Therefore, they need to take all steps possible to game the odds in their favour. But this can be tough when budgets are squeezed, resources are becoming increasingly scarce and speed to react and respond is critical.
"We are encouraging business to engage with government, their respective trade bodies and trade professionals to ensure they have as many bases covered as time, resource and budgets allow.”